Brazil bans Siemens from engineering bids after suspicion of bribery

A federal court ruled that Germany’s Siemens is prohibited from participating in public auctions and signing government contracts in Brazil for the next five years, company spokesman Alexander Becker said on Friday, confirming a report by the Estado de S. Paulo newspaper.

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By ALEX WEBB and CHRISTIANA SCIAUDONE

Bloomberg

Siemens, Europes biggest engineering
company, was banned from bidding on federal contracts in
Brazil because of suspected kickback payments.

A federal court ruled that Germanys Siemens is
prohibited from participating in public auctions and signing
government contracts in Brazil for the next five years,
company spokesman Alexander Becker said Friday, confirming a
report by the Estado de S. Paulo newspaper. The
ruling is from January, he said.

Siemens, which in 2008 adopted a zero tolerance
policy on bribery payments, said
in a separate statement that the sanction is tied to tender
proceedings in 1999 and 2004 and internal administrative
processes by the Brazilian Post and Telegraph. Siemens said
it started legal proceedings against the decision in 2010 and
has further appealed it.

A German bribery probe into Siemens business, that
began in 2006 and spread to at least a dozen countries,
prompted the resignation of CEO Klaus Kleinfeld and
supervisory board Chairman Heinrich von Pierer, and the
replacement of the head of the Brazilian subsidiary. The
company had more than 2.5 billion euros ($3.5 billion) in
costs related to the scandal, and former managers are still
the focus of court cases globally.

Including non-federal business, Siemens last year reported
sales of 1.95 billion euros in Brazil, where it has about
7,900 employees. That compares with 75.9 billion euros in
total revenue. The blacklisting affects about a single-digit
percentage of Siemens business in Brazil, the company
said.

Corruption Scandal

Siemens said in June last year that it has about 1 billion
euros in infrastructure project orders related to
Brazils 2014 soccer World Cup and 2016 Olympic Games.
That includes safety and building systems for the Mane
Garrincha National Stadium in Brasilia, and energy management
systems for the national grid operator, the company said at
the time.

Siemens will still be able to maintain its contract with
state electricity company Centrais Eletricas Brasileiras
S.A., known as Eletrobras, and State Grid Corp. of China to
supply substations for the Belo Monte dam transmission line
project, according to an
Eletrobras representative.

Eletrobras and State Grid won the bid to build the
transmission line on Feb. 7. Because State Grid has the
majority share of the joint venture, with 51%, the contract
isnt at risk.

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